Tech solutions are being developed to tackle the problem of video ad format fragmentation. Photograph: Steve Marcus/REUTERS

A few weeks ago I stumbled upon an article titled Why the Pipes Are Broken in Mobile Advertising. If you are an advertiser or a publisher dealing with online video, the challenges the article mentions would sound all too familiar: fragmentation of mobile devices, a dearth of good analytics, a lack of ad format standards and too many isolated solutions that only work for specific devices or streaming method. But guess what? That article was actually written in 2011 – before all the great devices such as connected TVs, tablets and Chromecast had caught on.

Is it really possible that no advancements have been made in almost three years? In reality, much has changed.

Specifications such as VAST (Video Ad Serving Template) and VPAID (Video Player-Ad API definition) have set the standard for online video ad types as pre-rolls, video pods and overlays. As a result, it's much easier to integrate with multiple ad networks and maximise one's ad inventory. Cost per thousand page impressions (CPMs) and real-time targeting are also far better than they used to be, thanks to improved cookies and real-time bidding.

All of these factors have made online video advertising smarter. Online video ads are far more effective than banners because user engagement can be tracked, allowing advertisers to know if the skip button was clicked or if the ads were muted by the viewer. In many ways, online video ad tools are much smarter than those used to track viewing of traditional TV commercials.

And while online video advertising is clearly a great way to monetise content online, we are not out of the woods yet. In some ways, the landscape is more challenging than it was back in 2011 – mainly due to increasing device fragmentation.

While online viewing is booming, an increasing number of viewers are using "closed" devices such as connected TVs and games consoles that are notoriously hard for publishers and advertisers to target. For example, on some of these devices, a pre-roll can be run pretty easily, but a mid-roll (i.e. a video ad that runs in the middle of the video) throws up challenges. As a result, the classic TV ad experience (2-3 ad breaks per programme) can't be offered by online content providers.

Fortunately, a combination of two ad serving technologies that reduce the challenges posed by device fragmentation are starting to make an impact: native player ad delivery and server-side ad stitching.

Native player ad delivery (or "smart ads")

These are used today on desktops, browsers on Apple devices, and native applications on iOS and new versions of Android. With this technology, once the user clicks the "Play" button, the player calls for an ad.

By using the native player, the ad is much "smarter" and advertisers have more options: the ad can be configured to be skippable or non-skippable and can include a strong call to action and an option to click on it. This approach also allows improved targeting based on the age, geo-location and the context of the ad environment (eg website, article) and improved analytics.

Server side ad stitching (or "dumb ads")

These let publishers reach pretty much any device that can be used to stream video – almost all Android browsers, connected TVs, Xbox, video aggregation mobile apps and Chromecast. It even helps with some ad blockers. This approach "stitches" the ad to the video file, removing much of the work that would otherwise need to be done to specifically integrate with a device's native player. If the device can play the video, it can play the ad. Ad stitching is consequently a good option for campaigns focused on reaching a broad audience and can help to significantly drive fill rate.

That said, it does have a few limitations. Stitched ads don't have easy-to-set-up skip buttons. Some stitched ads are very easy to skip, by simply skipping forward using the scrubber but in most cases the advertisers will not even know the ad was skipped. In addition, user targeting is limited and publishers have much less intelligence about how the ads perform.

Online video monetisation – whether via smart/dumb ads or via other payment models – is a hot topic this year. And while we have yet to solve some of the critical online advertising pain points that were present back in 2011, significant progress is being made. Dumb ads are a good tool – albeit perhaps a temporary one. The future will probably see more smart ads coming to the fore, regardless of how they are delivered to the device.

As we move into a more personalised web, the ability to get maximum insight into end users' viewing habits and interests is key. It's essential to keep that top of mind when approaching today's monetisation challenges.

Iddo Shai is Director of Product Marketing at Kaltura. You'll find him on Twitter @iddopop.

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